HSBC is a British bank, one of the largest investment banks in the world, headquartered in London. Prior to the Financial Crisis of 2008, HSBC was a leader in bank transfers.

This was back in the day when bank transfers weren’t as easy to do as now. HSBC acted as an intermediary, transferring a depositor’s money from one bank or credit union into its own bank and then on to another bank or credit union.

Forex is a similar operation. An intermediary bank accomplishes a transfer of one party’s currency into a different currency that is used by another country.

Usually forex transactions are a matter of exchanging smaller countries’ currency for the big five global currencies; the US dollar, EURO, Yen, British pound, or Swiss Franc.

For business transactions, forex facilitates trade between two or more parties operating in different country currencies.

International businesses; big investors called “money-market traders”; and tourists, all depend heavily on the forex market to “get to where they’re trying to go” financially or in person.

HSBC investigated the alleged fraud, a $3.5 billion purchase of sterling in 2011 for the Cairn Energy PLC, one of Europe’s leading independent oil and gas exploration and development companies, and found no breach of HSBC’s own code of conduct.

However, after the Financial Crisis of 2008 turned over a lot of financial rocks and slimy beings scurried out into the light, HSBC was alleged to have been involved in several kinds of shady dealings. Continue reading →

Goldman Sachs came to the rescue, arranging a secret loan of 2.8 billion euros for Greece, disguised as an off-the-books “cross-currency swap”—a complicated transaction in which Greece’s foreign-currency debt was converted into a domestic-currency obligation using a fictitious market exchange rate.

As a result, about 2 percent of Greece’s debt magically disappeared from its national accounts.

The consequences were severe:

By 2005, Greece owed almost double what it had put into the deal, pushing its off-the-books debt from 2.8 billion euros to 5.1 billion.

The eurozone is playing a dangerous game with Greece. Officials are treating the Greek crisis of payments as a liquidity problem. And that’s true as far as it goes. But Milton’s famous line from Paradise Lost inthe title of this post may still be true for Europe

Greece nearly couldn’t pay its debt to the International Monetary Fund (IMF) last week. Greece was able to pay the IMF only by withdrawing its own emergency funds left on deposit at the IMF. Obviously the IMF gained nothing from having Greeks withdraw money they had deposited in the IMF in order to pay the IMF.

Nevertheless, eurozone officials and financial reporters keep referring to Greece’s problem as a payment-on-time problem. That kind of problem is indeed what set off the toppling of the US financial system at the start of the Financial Crisis of 2007.